Telefonica Wants 10% of China Unicom: FT

Spain's Telefonica hopes to buy a 10 percent stake in wireless operator China Unicom to take advantage of opportunities from Beijing's plan to overhaul its telecoms industry, the Financial Times said on Thursday.

Telefonica , which owns 7.2 percent of fixed-line carrier China Netcom , wants to become partner to a firm that under that restructuring blueprint will take over Netcom's operations, Telefonica chairman Cesar Alierta told the newspaper.

China unveiled on May 24 a long-awaited plan to shake up the industry, orchestrating acquisitions to ensure the country will have three full-service carriers: China Mobile , China Telecom and the Unicom-Netcom entity.

Analysts say a number of multinational firms are now keen to grab a slice of the world's largest telecoms market, while the trio of newly enlarged Chinese operators may need the expertise and technology that foreign firms can bring.

Telefonica can aid Unicom through the challenges of combining fixed-line and mobile operations, Alierta was cited as saying.

"We have the know-how that we can share with our Chinese friends," Alierta said in an interview with the newspaper.

It was not clear from his comments to the Financial Times whether Telefonica intended to keep 10 percent of the enlarged Unicom-Netcom corporation, or hoped to buy into Unicom before the takeover.

After the merger of the two firms, Telefonica's stake in Netcom would be diluted to about 3 percent, the newspaper quoted Alierta as saying.

Apart from Telefonica, South Korea's SK Telecom is reportedly in talks over investment in China Telecom. Singapore Telecommunications has also publicly said it would be interested in investing in China.

Unicom is the smaller, and formerly only, rival to China Mobile in the country's wireless arena. Apart from Telefonica's investment, SK Telecom owns about 6.6 percent of the firm and Vodafone has taken a 3.3 percent slice of China Mobile.